Australian Dollar to US Dollar (AUD/USD) Exchange Rate Steady on RBA Caution

AUD/USD Exchange Rate Tight as RBA Plans Interest Rate Freeze

The Australian Dollar (AUD) has made limited movement against the US Dollar (USD) today, following the release of the latest Reserve Bank of Australia (RBA) minutes.

Covering the RBA’s meeting from earlier in October, the minutes have revealed a still-cautious outlook among policymakers.

While RBA officials are still planning to raise interest rates when they make the next adjustment, a rate hike looks further and further away based on the text of the minutes.

Highlighting this cautious outlook, the minutes said:

‘Members continued to agree that the next move in the cash rate was more likely to be an increase than a decrease.

‘However, since progress on unemployment and inflation was likely to be gradual, they also agreed there was no strong case for a near-term adjustment in monetary policy.

‘Members assessed that it would be appropriate to hold the cash rate steady and for the Bank to be a source of stability and confidence while this progress unfolds.’

US Dollar Australian Dollar (USD/AUD) Exchange Rate Weakened by Retail Sales Disappointment

The US Dollar (USD) has traded tightly against the Australian Dollar (AUD) today, following yesterday’s disappointing news of a retail sales slowdown.

Monday’s data, covering sales activity in September, showed a slower pace of growth for the year-on-year reading, while the monthly figure excluding vehicle sales dropped from 0.2% to -0.1%.

This poor performance still left the ‘base’ sales figures showing growth, but as the results missed forecasts the net effect of the news was negative.

Australian Dollar US Dollar Forecast: Will AUD/USD Exchange Rate Rise on Slower US Productivity?

Looking ahead, the Australian Dollar (AUD) might advance against the US Dollar (USD) later today when US industrial production data comes out.

Covering reported activity in September, both the monthly and annual readings are tipped to show a slowdown.

Such results could drain USD trader confidence and weaken the US Dollar, which may open the door to an AUD/USD exchange rate rise.

Beyond this, Reserve Bank of Australia (RBA) Deputy Governor Guy Debelle will be speaking this evening and might further support an Australian Dollar rise with his remarks.

Mr Debelle will be discussing the ‘State of the Labour Market’ in his speech and could boost AUD demand by forecasting a faster pace of wage growth in the future.

Adam Solomon

Adam joined the team at TorFX soon after graduating from University in 2005 with a degree in Journalism. Since then Adam has advanced to become both Head of Trading and Head of Treasury. His keen interest in the currency market and knowledge of what drives exchange rates makes him perfectly positioned to produce regular market updates focused on the movements of the major currencies.

Contact Adam Solomon